n n n ‘.concat(e.i18n.t(“search.voice.recognition_retry”),’n
Ezgi Yagci; VP of IR; Inspire Medical Systems, Inc.
Richard Buchholz
Timothy P. Herbert; CEO, President and Director; Inspiring Medical Systems, Inc.
Adam Carl Maeder; Director and Senior Research Analyst; Piper Sandler
Antonio Carlos Petrone; MD and Senior Analyst of Action Research for Devices, Diagnostics and Therapeutics; Mizuho Securities USA LLC, Research Division
Brett Adam Fishbin; Senior Associate, Stock Research; KeyBanc Capital Markets Inc. , Research Division
Danielle Joy Antalffy; Analyst; UBS Investment Banking, Research Division
David Kenneth Rescott; Senior Research Analyst; Robert W. Baird
Jonathan David Block; MD and Senior Equity Research Analyst; Stifel, Nicolas
Lei Huang; Associate Analyst; Wells Fargo Securities, LLC, Research Division
Lilia-Celine Breton Lozada; Research Analyst; JPMorgan Chase & Co, Research Division
Michael Anthony Sarcone; Equity Analyst; Jefferies LLC, Research Division
Michael Holden Kratky; Senior Research Analyst; Leerink Partners LLC, Research Division
Richard Samuel Newitter; Research Analyst; Truist Securities, Inc., Research Division
Suraj Kalia; MD & Senior Analyst; Oppenheimer & Co. Inc., Research Division
Unidentified analyst
Operator
Good afternoon. My calling is Dilem and today I will be your convention operator. At this time, I’d like to welcome you all to the Inspire Medical Systems convention call for the fourth quarter and full year 2023. (Operator’s Instructions) Now I’ll pre-empt the call to its first speaker, Ezgi Yagci, vice president of investor relations at Inspire. The convention can begin.
Ezgi Yagci
Thank you, Dilem, and thank you all for joining the call today. With me are Tim Herbert, president and CEO; and Rick Buchholz, chief financial officer. Today we publish the monetary statements for the 3 and 12 months ended December 31, 2023. You can obtain a copy of the press release on our website. During this call, Control will make forward-looking statements within the meaning of the federal securities laws. All forward-looking statements, including, but not limited to, those relating to our operations, monetary effects and monetary condition, investments in our business, monetary and operational outlook for the year 2024 and adjustments in access to market position, are based on our existing estimates and assumptions. These statements involve vital dangers and uncertainties that may cause actual effects or occasions to differ materially. Therefore, you should not place undue reliance on such statements. Please see our filings with the Securities and Exchange Commission, including our Form 10-K, which we expect to file with the SEC on February 9, 2024, for a description of those dangers and uncertainties. Inspire disclaims any objective or obligation, unless required by law, to update or revise any monetary projections in forward-looking statements, whether as a result of new data, long-term events or otherwise. This convention call includes time-sensitive data and is only valid as of today’s livestream, February 6, 2024. With that said, I’m happy to turn the call over to Tim HerbertArray Tim?
Timothy P. Herbert
Thanks Ezgi. And thank you to each and every one for joining our Q4 2023 business update call. We are excited to report our first quarter with a steady lead and a very strong end to the year. We know that our focus and focus on patient outcomes and ensuring each and every patient has the most productive experience imaginable with Inspire Therapy is the foundation of our business, and we remain committed to making this our highest priority. . During today’s call, we will highlight many 2023 accomplishments that demonstrate our continued focus on patients, adding improved treatment access, technological advancements, and planned activities to expand the population who can benefit from Inspire. We will also discuss our outlook for the full year 2024. We would like to take a moment to recognize two very special Americans who recently announced their retirement from the Inspire Board of Directors after many years of service. Last week, we announced that Dr. Jerry Griffin, who after 16 years on Inspire’s board of directors, plans to retire, following our 2024 annual meeting of consistent percentage holders. Dr. Griffin is one of our first trustees who joined the board in 2008 and has been an inspiring leader throughout our progress and publicity. To have significant medical influence on our Board of Directors, we recently announced the appointment of Dr. Myriam Curet, a doctor with extensive experience in the medical technology business and industry, to our Board of Directors. administration. Secondly, and just yesterday, we announced the retirement of Marilyn Carlson Nelson from our Board of Directors. Marilyn joined the board as president in 2018 following the death of her husband, Dr. Glen Nelson, Inspire’s original president. Marilyn has had a profound impact on our company and our team members during her time on the board, and she has been an excellent leader and mentor to me and many others within the organization. Along with Marilyn’s retirement, I am humbled and revered to be named Chairman of the Inspire Board of Directors and look forward to this additional role and continuing to lead Inspire for many years of expansion to come. Ultimately, the board of directors appointed Gary Ellis as lead director. Gary was appointed to Inspire’s board of directors in 2019 after a long career as CFO of Medtronic. And he most recently serves as Chairman of the Nominating and Corporate Governance Committee. Although Jerry and Marilyn will be missed, they will remain part of the Inspire family circle and will be available at all times, and we sincerely thank them for their contributions to Inspire. Let’s return to our review of 2023. The year was filled with many vital milestones and achievements. We are pleased to announce that as of the end of the year, more than 60,000 patients have been treated with Inspire Therapy. We expanded the indications and obtained FDA approval to provide Inspire to pediatric patients with Down syndrome to increase the apnea-hypopnea index limit from 65 to 100 times per hour and increase the precautionary body mass index from 32 to 40 . . . check our effects. In the fourth quarter, we generated cash of $192. 5 million, an increase of 40% compared to the fourth quarter of 2022. Our expansion continues driven by improved utilization at existing centers and is complemented by the activation of new centers. . Fourth-quarter US cash inflow was $189. 4 million, an increase of 41% compared to the same period last year. International cash inflow decreased 16% to $3. 1 million. As we predicted in our third quarter cash call, during the fourth quarter we exhausted our source of polyurethane-based yarns in Europe, as we are still waiting for the EU Medical Device Regulation or EU MDR approval. We are working diligently to obtain EU MDR approval and, in emergency cases, have obtained exemption authorization in the Netherlands and Belgium and, more recently, in Germany and Switzerland. This constantly prevents us from shipping silicon-based cables to those countries while we proceed to seek EU MDR approval. Given the strength we are seeing in our business, we are firming our 2024 cash guidance of $775 million to $785 million, representing a year-over-year expansion of 24% to 26% compared to 2023 cash of $ 624. 8 million. We are pleased to report our first quarter with a steady stream of cash inflows of $9. 3 million. Our net cash source for the fourth quarter was $14. 8 million compared to $3. 2 million in the prior year same period, representing a diluted net cash source consistent with a percentage of $0. 49 in compared to $0. 10 compared to a consistent percentage in the fourth quarter. 2022. We will continue to focus on steady leverage in 2024 and beyond and will be looking to build toward solid upside as we progress through the year. We will have additional guidance after our first quarter results. In the United States, during the fourth quarter, we continued to strengthen our capacity to meet the strong demand for Inspire treatment by loading 78 new implementation centers, ending the quarter with a total of 1,180 centers. In 2024, we plan to activate 52 to 56 new centers on terms consistent with the quarter. Regarding the US sales team, we added thirteen new sales territories in the fourth quarter, bringing our total to 287. In 2024, we plan to add 12 to 14 sales territories consistent with the quarter. One of our keys to good luck is our ability to raise awareness of Inspire Therapy through our direct-to-consumer programs. As such, we were excited to launch a new approved online page at inspiresleep. com in December, providing sources to enhance Inspire Therapy education. Array and add new doctor testimonials. After launching a direct virtual programming program through our Advisor Care program in 2022, we expanded the program in 2023 to over one hundred centers and will continue to focus on this in 2024. We also continue to expand our patient care program through a online program. service. mailed to patients who visited inspiresleep. com or called our ACP and expressed continued interest in Inspire treatment. Go to access to market position. Our positive effects in the fourth quarter reflect strong patient demand for Inspire treatment and an increasing number of prior authorization submissions, results that are expected to continue into 2024. Additionally, we have added a third-party component supplier to complete to help our clients. Team access to market position with initial procedures. authorization procedure, which strengthens our ability to meet the strong and developing demands of patients. The Market Access team actively collaborated with payers on clinical indication expansion approvals obtained last year. The procedure comes to our team by offering payers mandatory clinical data and requesting its implementation into the payer’s policy policies. Fortunately, we have fully implemented many policies and expect more progress in 2024. We continue to invest in our clinical research, as demonstrated by the PREDICTOR study. We finished recruiting the second subset of three hundred patients early in the first quarter and plan to publish the effects once the full body of knowledge has been analyzed. Once results are available, we will work with payers to update their policies to ensure some flexibility when evaluating which patients are eligible to receive Inspire. The PREDICTOR study is designed to compare whether and when an in-office assessment can reposition the termination of long-standing drug-induced sleep phinoscopy or DISE. This in-office procedure will especially enhance the patient experience and allow the physician to lose the ability to perform additional Inspire procedures. As far as product progression is concerned, our portfolio remains strong. The team is diligently analyzing our reaction to the FDA’s questions regarding the Inspire V PMA supplement. Remember that the Inspire V formulation integrates sensing capability into the neurostimulator using an accelerometer and eliminates the need for a pressure sensing cable. Lately we are conducting production point qualification testing and formulations for submission to the FDA. With an overall review timeline, we continue to expect approval under restricted advertising in 2024, and we aim for a full advertising launch in 2025. In 2024, we will launch our new Connected Doctor Scheduler in the United States, called SleepSync. programmer. This will allow clinicians to access our programming screens from their own computer and will eliminate the need to use Inspire-supplied tablets as part of the clinician’s programming formula, paving the way for a long-term patient programmer to distance themselves. We continue to encourage adoption of our SleepSync virtual platform and are implementing improvements to optimize the patient experience from first contact through long-term longitudinal management. In summary, we remain focused on patient outcomes and physician education to continue the adoption of Inspire treatment. We will continue to increase utilization of our existing centers while expanding capacity by opening new centers. We remain excited about long-term customers and are confident we have the right strategy in place to drive long-term pricing for interested parties. With that said, I would like to turn it over to Rick to review our monetary statements.
Richard Buchholz
Thank you, Tim, and good afternoon everyone. Total profit for the fourth quarter was $192. 5 million, an increase of 40% from the $137. 9 million generated in the fourth quarter of 2022. -United States in the fourth quarter amounted to $189. 4 million, a 41% increase from $134. 3 million year over year. Array The main driving force for expansion in the United States has been consistent with usage at existing centers. Other reasons for expansion come with the addition of new locations, continued direct-to-consumer marketing, and a steady increase in the number of territory managers. Revenue outside the United States was $3. 1 million, a 16% year-over-year decline. As Tim noted, this was due to the delay in the approval of the EU MDR, which works against our ability to ship silicon cables to Europe in the fourth quarter. The average value of sales in the United States in the fourth quarter was $25,000, up from $24,900 a year earlier. We expect the US ASP to remain strong at the current level. ASP outside the United States was $19,900 in the quarter, compared to $20,400 in the fourth quarter of 2022. Gross margin in the fourth quarter was 85. 4%, compared to 83. 9%. during the same period last year. Year-over-year buildup was driven through increased production efficiencies and consistent growth with volumes. Total expenses consistent with expenses for the fourth quarter were $155. 2 million, an increase of 34% from $116. 1 million in the fourth quarter of 2022. This increase was due to the expansion of our sales organization, the creation of direct staff consumer marketing programs, ongoing product progression efforts and general corporate expenses. The source of interest earnings and dividends totaled $5. 9 million in the fourth quarter, compared to $3. 4 million during the same period last year. This accumulation of gains is due to the consistent increase in interest rates on our investment and money balances compared to last year. Net source of earnings for the fourth quarter was $14. 8 million, compared to $3. 2 million in the prior year consistent with the same period, representing a diluted net source of earnings consistent with a consistent percentage of $0, 49, compared to $0. 10 consistent with a consistent percentage in the fourth quarter of 2022. The weighted average number of notable consistent diluted percentages for the fourth quarter was 30. 2 million. We expect the weighted average number of notable consistent percentages in the first quarter to be approximately 29. 6 million. Our total money accumulation increased to $18 million in 2023 and money and investments were $470 million at the end of the year. The strong monetary position allows us to remain focused on executing our expansion strategy of expanding procedure volumes at existing centers while educating and opening new implementation centers. Looking ahead, we expect to generate positive cash flow for the full year 2024. For the full year 2023, profits amounted to $624. 8 million, an increase of 53% compared to $407. 9 million . Profits in the United States were $606. 2 million, a year-over-year expansion of 54%, while profits abroad in the United States totaled $18. 6 million. dollars, which represents an expansion of 43% in one year. Turning to the forecast for 2024. Given the strong results we are seeing in our business, we continue to forecast full-year earnings to be between $775 million and $785 million, which represents an increase of 24% to 26% compared to the year fiscal. Profit 2023. We expect full-year gross margin to be between 83% and 85%. As Tim noted, we plan to activate 52 to 56 new U. S. centers and identify 12 to 14 new U. S. sales territories consistent with the 2024 quarter. As a reminder, given the prevalence of fitness with maximum deductibles, we have traditionally noticed seasonality in our business in the first quarter. Additionally, the fourth quarter of 2023 was exceptionally strong given the recovery in the third quarter. Therefore, we expect more pronounced seasonality in the first quarter of 2024 compared to previous levels. We expect our momentum and leverage to continue into 2024 and to be successful during the first part of 2024. We will provide more highlights in our first quarter earnings call. In conclusion, our strong functionality and business momentum give us confidence in our prospects through 2024. With this, we conclude our comments. Dilem, you can now open the line for questions.
Operator
(Operator’s Instructions) And I show that the first one comes from the lineage of Adam Maeder of Piper Sandler.
Adam Carl Maeder
Tim and Rick, I hope you can hear me clearly. And congratulations on a wonderful end to the year and it’s wonderful to see the leverage for the quarter. Maybe just to start with the forecast for 2024, between $775 and $785 million, could you perhaps go into more detail on that?What do you think about the use or growth of same-store sales?What does the recommendation imply in relation to the expansion of the label and the launch of Generation 5?Just guide us through some of those purchases and holds and then I’ll move on.
Timothy P. Herbert
Adam, I think first and foremost, we’re seeing a trend where same-store sales or increased use of existing centers are the number one driving force of our expansion in 2023 and we expect that to continue through 2024. We’re definitely going to complement that with the opening of new centers, and we’ve provided the consultant with what we plan to open new centers as we move into the first quarter. But again, we will continue to build otolaryngology capacity and expand the number of procedures performed at existing centers.
Adam Carl Maeder
And any comments, Tim, on the growth of the label or the impact of Gen 5 on those numbers?
Timothy P. Herbert
Of course. I don’t think the fifth generation will play a big role because we’re going to be doing a limited release of our plan in 2024 and we’re making plans for a full release in 2025. So we’ll have time to communicate about that later. . I think that the expansion of indications will begin to manifest itself in 2024, basically with an increase in AHI and the paediatric population with Down syndrome is very sensitised lately. Keep in mind that a high BMI depends on a mechanism of action and today we use sleep endoscopy to treat patients with tongue obstruction and higher BMI in patients with sidewall obstructions. That’s where we struggle. In fact, that’s our goal. Some of those patients would possibly benefit from GLP-1.
Adam Carl Maeder
It’s a smart color. And I feel like I want to ask about this quarter’s leverage, the positive operating result. I know there’s some seasonal variability in the models, however, Rick, what versions or frameworks can you give us as we think about 2024 and this quarter’s forward-looking leverage?year. And I heard the comment before, it turns out it’s a precedent in 2024, and I think I heard the word move towards solid profitability over the course of the year. But I was hoping you could tell us this in a little more detail.
Richard Buchholz
Of course. Thank you, Adam. Yes, our purpose continues to be to drive revenue expansion as we expand the adoption of therapies. And we’ve demonstrated the strengthening of our operating leverage in the model. We saw that in the fourth quarter. And we’ll be waiting to see that. We have seasonality, which I suppose we can get to later, but we have seasonality in the first quarter. But we expect that leverage to improve, and that’s why we’ve said we expect to succeed in the second part of 2024.
Operator
And I show that the next one comes from the Travis Steed line of Bank of America Securities.
Unidentified Analyst
I’m [Caroline] from Travis. Congratulations on the quarter. I had a profit forecast for the 24th. If I could reach out on what’s included in those battery replacement tips and make plans to get started this year. So I’m going to stick to the earnings forecast for the 24th. the first consultation. And then, a momentary question, I heard the reiteration of the limited market launch in 2024 and then the full launch in 2025 for the Inspire V and I wanted to see if you could also give us an update on where it stands. submission to the FDA?
Timothy P. Herbert
Battery replacements will remain limited in 2024. We’ll start to see some of the first advertising patients arrive. We’re still seeing patients who participated in the STAR trial coming in today. But the first year on the market was 2014 and adding 10. 5 years, 11 years of battery life, puts us between 24 and 2025. So we’re going to start to see that come to fruition next year, but it won’t have a significant impact. For a few more years until we get higher volumes, but it’s still very promising. As far as the introduction of Inspire V is concerned, the team is doing a wonderful job. We are still in the final stages of testing and documentation to be able to provide this data to the FDA, and our goal is to get approval for later in the year to give the option to continue with the limited rollout later in 2024, and the team is working hard to be in a position to conduct a full advertising rollout. in 2025.
Operator
And I show that the next one comes from the lineage of JPMorgan’s Robbie Marcus.
Lilia-Céline Bretón Lozada
I’m Lilia to Robbie. When it comes to foreign trade, how do we deserve to see your expansion this year in light of some teething challenges?And is there a time frame that we need to keep in mind for when we can get back to mainstream levels of foreign trade?benefit and source?
Timothy P. Herbert
Very smart question. Thanks a lot. We have struggled to get the waiver approved, mainly in Germany in 2023. Although this approval is obtained, the waiver requires us to ensure that we make adjustments to the labeling to identify the product being shipped prior to the MDR of the waiver. EU. So we ship products to Germany and that will come back. But it will probably take a few quarters for them to be strong again, but we are in a very promising move, either with waivers in the countries that we have identified, but also in the progress towards full MDR integration of EU countries. And I hope that we will be able to achieve this in the course of the year so that we can supply silicon cables to the rest of Europe.
Operator
And the next one comes from the lineage of Michael Sarcone of Jefferies.
Michael Antonio Sarcone
Perhaps you could just give us an update, if possible, on the evolution of the business so far in the first quarter?And then maybe a little bit how do you visualize seasonality this year and the cadence of quarterly sales?
Timothy P. Herbert
Absolument. Eh, well, I think we’re very comfortable with the strength of the organization as we come out of the fourth quarter, whether it’s to establish our consultant or reconfirm the consultant that we originally announced at the JPMorgan conference. . That’s why we’re happy with the instructions that come below. I’m going to let Rick play the cadence of the quarters a little bit, particularly the seasonality here in the first quarter.
Richard Buchholz
Right. Thank you for the question. So, as I mentioned in the previous comments, we have a more powerful advertising mix with higher-deductible plans in the fourth quarter. So we’re seeing that seasonality in the first quarter, but we’ve also noticed a slight recovery from the third quarter to the fourth quarter. So we had a very strong fourth quarter, and that’s where we discussed that we could have more pronounced seasonality. So, given typical seasonality and a more potent fourth trimester, our seasonality in the first trimester can sequentially shift from mid to adolescence. And then from there, we expect it to come back and grow, and as you may have noticed, our forecast is to have an expansion between 24% and 26%, or $780 million at the midpoint.
Michael Antonio Sarcone
They gave it to me. And then, I guess, just a follow-up of profitability. Again, just a clarification, is the profitability achieved in the second part of 2024 a fundamental element of the operating source of revenue and net profitability?
Richard Buchholz
Oui. Au the time we are here today, yes, it is, then it will be for the time being part of the year.
Operator
And I show our next question comes from the line of Danielle Antalffy from UBS.
Danielle Joy Antalffy
Congratulations on a wonderful end to 2023 and I look forward to 2024. I guess, Tim, the only question I wanted to ask: I have two queries. First, about the sleep centers. And I know getting patients through sleep centers is going to be a bottleneck, they’ve made investments in that. Am I just curious to see how those investments turned out?And are sleep centers still a bottleneck?Or is it starting to decline? And then before SURMOUNT-OSA comes along at some point, maybe in the middle of the year, I’d love to think a little bit more about how we should think about the funnel effect of Inspire in ’24. and 25, assuming so. Get a policy for patients with obstructive sleep apnea?
Timothy P. Herbert
Thank you very much, Danielle. Good to hear from you. As far as sleep centers go, it’s taking that even a step higher. We’re spending a lot of time even educating and involving sleep physicians to be more involved with the patients and specifically with the longitudinal management. So while the focus today remains on building the capacity of the ENT, we know that the next challenge will be building enough capacity with the sleep physicians and specifically around the sleep centers. A lot of payers require sleep studies to be performed at — in a sleep lab for a polysomnography. But we do talk to them and show the value of home sleep testing and we’ve had opportunities to work with different parties to be able to provide home sleep testing or different areas to be able to help assess sleeping. That’s going to continue to be a focus going forward into 2024 and beyond. And we’re trying to make sure that that’s not going to be a challenge going forward because we can get those patients properly diagnosed. And we do know, most of the payers require a current sleep study within 2 years prior to moving on with Inspire. As far as the SURMOUNT-OSA trial, yes, hopefully, that data will come out earlier in the year. We would like to hope it’s successful and can show a 50% reduction in AHI. We know that’s going to be a little bit of a challenge for the drug. As long as the compliance and the weight loss is there to support that. But with the demographics of that study having a BMI of on average 40 and AHI, an average of 50, we really need to see a 50% reduction to have those patients move into the approved Inspire indication and the majority of the patients in that study when we look at the demographics, they really won’t qualify for Inspire today anyways because of the lateral wall collapse associated with a high BMI. So we look forward to seeing that data, but we do not believe it’s going to have any impact on our patient flow this year and will tend to be positive as we kind of move forward after 2024.
Operator
And I show that the next one comes from the lineage of Richard Newitter of Truist Securities.
Richard Samuel Newitter
Congratulations on the quarter and profitability as well. So, maybe you have two questions. The first, right with the arrival of the Inspire V, has an initial release, hopefully, approval later this year. I suppose, if so, take customers into consideration for other people who might be delayed. Or they need the next-generation device, if they know it’s coming, doctors and patients. I’m just curious to know how he envisioned it. Should we expect an effect and if it’s in the guide?
Timothy P. Herbert
We don’t think there’s a delay. We know that patients are motivated to move on to therapy. Patients who are not treated with moderate to severe sleep apnea have a significant challenge in their quality of life and are motivated to go through treatment. Remember, we’re talking about replacing the device. The Inspire IV formula is, therefore, a very hard formula, which provides very solid results. And also, you’re talking about later in the year, when we’ll move on to dealing with high-deductible insurance plans as well. Therefore, they do not come with any patient processing time in the model. We, the patients, will continue their treatment, which is consistent with previous releases when we transitioned from the Inspire II device to the Inspire IV device and, to a lesser extent, with the new remote control and motion. from polyurethane to silicone. So we’re aware of that. We’re following that. We make sure to teach patients appropriately, but we don’t anticipate any delays and haven’t incorporated it into our guidelines.
Richard Samuel Newitter
Super. And maybe just one last thing, Tim, you have a number of projects that are hopefully looking to unlock some of the bottlenecks that exist as well as some performance gaps, Inspire V will be one of them. remove the DISE when possible with the [PREDICTOR] test. However, it looks like many of those measures won’t go into effect or have the expected effect starting in 2025. I’m just curious what kind of threshold do you think there is? Or can you tell us to give us assurance that you may not have capacity issues until 2025? Is there any point of use where capacity could become an issue? And how do we think about it? in the context of its initial orientations?
Timothy P. Herbert
Of course. I think the genuine thing is to keep it undeniable and let’s talk about ENT surgeons today. And as we’ve progressed over the last few years, it’s just a very gradual increase in usage and the number one approach to expanding capacity is the ENT trust. And it is the Otorhinolaryngologist who has acquired the greatest delight and who has a solid team. In this way the otorhinolaryngologist can perform more instances to become more competent. The procedure takes less time, they gain confidence in the procedure, but it is essential that they have close collaboration with sleep doctors to be able to treat patients longitudinally. Therefore, the entire team knows their role in the centers and the centers that are developing the most rapidly in use are those that have a strong ENT team carrying out the procedure, a sleep doctor who can lend a hand with the diagnosis but can also manage longitudinal management of the patient, leaving the ENT specialists available to perform further implantation procedures. We don’t necessarily have difficulty spending time in the operating room. We struggle to get enough ENT time to go into the operating room and perform the procedures. And in fact we don’t have any problems with the flow of patients. We know that our direct-to-consumer sales drive patients to otolaryngologists. So we’re going to refine our formulas a little bit, adding the website, to make sure that patients have maximum productive opportunities and can move on to centers that have the capacity to care for them and get positive results and really focus on utilization. , because we know the maximum centers used and we achieve the maximum productive effects for patients. They are more fun. So it’s the undeniable things that are happening to motivate us in 2024, not to mention what we lightly discussed on the call regarding our generation’s progression with our SleepSync formula for patient throughput and assisting patients in getting appointments. . Therefore, we will explore several avenues in 2024. continue to increase its use. And then, as we discussed, some key things down the road will be the elimination of DISE with PREDICTOR and Inspire V with reduced OR time. But there is still a lot of work to do here in 2024 to continue to be successful.
Operator
And I show our next question comes from the line of David Rescott from Baird.
David Kenneth Rescott
Congratulations on a wonderful end of the year here. I tried to start by diving a little bit into. . . or clarifying the comments you made about the foreigner. It’s kind of like the consultant put it this year. I know you said you want a few quarters to get back to some of the normalized levels of expansion. But I wonder if expansion into overseas markets in 2024 would contribute to the company’s overall expansion, given some of the comments about the existing waiver scenario and then returning to expansion levels.
Timothy P. Herbert
That’s a smart question. I think Germany is coming back with a vengeance now that we can start shipping products after the relabeling efforts. And we know that the Netherlands and Belgium are strong because they had a previous exemption in 2023 in the fourth quarter that allowed us to start shipping products there. We’re excited. We, France, will announce the new coding, as well as a full national refund in 2024, so that we can achieve some expansion in that country. Therefore, we are excited about the upcoming launch in France. We have a couple of polyurethane tracks that we can now provide assistance to the UK and Australia so that we can continue to manufacture implants in those countries. So we’ll be able to reconnect in those countries as well. And then we will continue to work hard in Singapore and Japan. We’re seeing a positive expansion over the course of the year and Rick, do you have any other comments on that?
Richard Buchholz
David, I’d just further comment on a quarterly basis, given the dynamics of 2023, our growth rates have been a little lumpy, if you will, in the international markets. But on an overall basis, as we go forward, we still expect outside the U.S. revenue to be right around 3% roughly of our overall worldwide revenue.
David Kenneth Rescott
It is ok. That’s helpful. And then, just on the profit side. I know I appreciate the kind of commentary about the current part of 2024, which is this sustained profit point. When you think about where you are from an attitude of penetration and then some of the investments over the next few years, as the DTC becomes more focused, is there any explanation for thinking that this sustained point of profit in the second part of 2024 shouldn’t be some sort of starting point heading into 2025 and beyond?
Richard Buchholz
Oui. Je means, we provide direction on an annual basis, but we are excited about the leverage we showed in the fourth quarter and the confidence we have in our 2024 revenue. We have proven our leverage. We’re going to lose some of that leverage with our steeper seasonality in the first quarter, but we’ll come back to that later. And our comment was that we’re going to be successful for the time being in 2024, but we’re not giving any long-term guidance yet, but we’re proceeding to leverage on an annual basis, as you’ve seen.
Operator
And it looks like the next one comes from the lineage of Anthony Petrone of the Mizuho Group.
Anthony Charles Petrone
Tim and Rick, congrats to the strong start — strong end to the year and solid guidance that you put out earlier at JPMorgan. Maybe one just on utilization, tackling it a different way. Our math shows that you got to just north of 2 implants per center per quarter here exiting December. So just wondering is 2 a right number now to jump off for the rest of the year? Or will that just remain a little bit lumpy depending how patient flow comes in? And then I’ll have one quick follow-up on UnitedHealthcare.
Richard Buchholz
Of course. Thanks for the question. So a little over 2, just to explain, that’s 2 procedures consistent with the middle of the month.
Anthony Charles Petrone
Alright. Yes, Im sorry.
Richard Buchholz
Yes, we had a little more than 2 and a little less than 2 a year ago in the fourth quarter. Again, as we continue to load new centers, we get to 1,180 centers, it’s getting harder to scale usage, but we’ve continued to do that year after year. other. If you look at each quarter, that’s one of our focuses for 2024 and beyond. We think there is a lot of room for this use, but it’s like this: it’s harder to do things about it. Year over year, if you look at our expansion, 70% of our expansion came from existing centers and 30% of our expansion came from new centers. That means healthy activity, and that’s consistent with 2022. So if we can maintain that, continue to load new locations, move that usage. If you look at our top quartile, they are doing well above two procedures per month. So we need to move all those cubes up, so to speak. That’s why it’s a real precedent for us.
Antonio Carlos Petrone
And the rest went to United. Previous positive announcement in the year, January 1. They basically meet the FDA’s IAH and BMI thresholds, but add the mandibular tower flavor, so to speak, maybe to slow it down a bit. But net-net, that’s very positive. So what do we expect from the UnitedHealthcare patient?Have you heard of other payers?
Timothy P. Herbert
Yes. Thank you very much. We don’t think it’s going to really affect UnitedHealthcare. They had some regional policies to actually deal with mandibular devices or oral appliances in the past. We’re very careful to educate the centers when the physicians are preparing their notes and the sites prepared their prior authorization documentation, that they include information in there in regards to the patient’s qualifications. And if they have the right anatomy or severity to be able to qualify for our oral appliance. So we have a little bit of practice dealing with UnitedHealthcare on this subject. All the patients are prior authorized so we make sure that we put the necessary information are provided from the centers into the submissions such that when we get the prior authorization approvals, we can just kind of move forward. So we don’t see that from any other payers that’s kind of a unique UnitedHealthcare. But to your point, it is a significant win for the patients in that the expansion to a high AHI to 100 and the BMI warning to 40, and let’s make sure we highlight the pediatric population with Down syndrome. So it’s in there, we continue to work with UnitedHealthcare, and we’ll continue to push back on them on that. But we don’t see it being really disruptive in the year.
Operator
And I show that the next one comes from the lineage of KeyBanc’s Brett Fishbin.
Brett Adam Fishbin
Tim and Rick, just wanted to start off. Over the past month, we had a competitor announced their objective to launch a competitive hypoglossal nerve stim device later in 2024. So I was just hoping for a bit of an update from you guys about how you’re thinking about potential future competition in the U.S. market. And then if you think you might have to do anything outside of the normal practices, just to protect that market share in the event that this does actually happen on time?
Timothy P. Herbert
We’re tracking everyone. We know that the market that we have created and the market that we are expanding, whether in the United States or internationally, is very attractive. We know that this is one of the largest markets that exist in the medical generation industry. And of course we will offer to other people who are following other approaches. And while you talked about an expanding company, there are several others that are in the early stages of expansion. We do not depend on the generation we currently have. And we’ve already talked a little bit about Inspire V here on this call. But in the afterlife we have talked about Inspire VI and VII and about proceeding to expand the indications and be able to treat other teams with obstructive sleep apnea. Not to mention our ability to manage those patients longitudinally with our SleepSync virtual fitness system. So yes, we are very aware of all the competition. We know the demanding situations related to some existing technologies. We know that some would possibly publish data and we do not rely on our clinical evidence. In fact, the current clinical evidence for our product is astonishing compared to the evidence with which we were approved in the STAR trial. We will continue to care for our patients and do everything we can to drive adoption of Inspire.
Brett Adam Fishbin
It’s bien. Super. Et then just for my follow-up. You talked a little bit about France on today’s call. And I know that that component of the 2024 plan is potentially aimed at ensuring secure payment in this territory. I’m just curious if you can provide me with a little more detail on how you understand the market opportunity and how the rebate can potentially drive commercialization in this region?
Timothy P. Herbert
It is ok. Thank you very much Brett. I think last year in France they announced that the national reimbursement had been approved. And we took the next step, which was to expand the coding criteria for doctors to make reimbursement, and that moves through the system. This has yet to be officially announced. We expect this to happen in the very near future. We hired a national director. We have a team in France preparing for the launch. And we hope to be able to report positive progress in this direction in 2024. We are very excited about France as a very vital opportunity for sleep apnea and for Inspire technology. And with what we have been able to demonstrate in our expansion in Germany, we believe that we will have a significant consolidation in France. And then the other key area where we’re going to have to look at the ascent is going to be Japan. So we’re very excited about France and we’re going to continue to work with the government to get the announcement made and our team able to launch there.
Operator
And I show that the next one comes from the lineage of Mike Kratky of Leerink Partners.
Michael Holden Kratky
Regarding United’s recent policy changes, i. e. , the new requirement for oral appliance treatment, do you have any idea for patients receiving Inspire treatment who have not yet tried and failed oral appliance treatment?And then I have a follow-up.
Timothy P. Herbert
I think the majority of them. I think that most patients, well most patients, if not all of them have been introduced to or attempted CPAP but oral appliances haven’t been well documented for successful use with severe obstructive sleep apnea. In fact, it is most beneficial with snoring or mild, maybe slightly moderate. So I don’t — I think the majority of our patients have not been introduced to oral appliance and probably based on their anatomy, wouldn’t qualify for it anyways or have a desire to start that because of the severity of their obstructive sleep apnea.
Michael Holden Kratky
Got it. Understood. And then just as a quick follow-up. Are most patients able to get oral appliance therapy without going to the dentist to get custom fitted? Or is that a necessary part of the process?
Timothy P. Herbert
It’s part of the experience of going to the dentist because you need to be well equipped to be sure that if you’re getting an oral appliance, you’ll have enough forward movement. from below. jaw to be able to create enough volume behind the base of the tongue to be able to treat obstructive sleep apnea well. In some cases of moderate to severe sleep apnea, you may want to move your lower jaw forward up to 10 millimeters. And you might think it’s a pretty awkward forward movement. Therefore, it is quite limited when it comes to cases of maximum severity.
Operator
And I show that the next one comes from the lineage of Wells Fargo’s Larry Biegelsen.
Lei Huang
I’m Lei calling Larry. First of all, just an explanation about the fourth trimester, please. You discussed a safe recovery in the fourth quarter, due to delays in procedures in the third quarter. Can you quantify the extent of this recovery? Maybe a figure of $5 or $10 million. And on that note, he also talked about headwinds outside the U. S. U. S. government at this time. In Germany, the repeal came perhaps a little later. So, obviously, that had some effects in the fourth quarter. Quantify this number? And I have a follow-up.
Richard Buchholz
Of course. First, we don’t quantify fourth-quarter strength. We have already mentioned that some procedures were not planned or completed in the third quarter, but we did not quantify it. Some procedures were carried out in the fourth quarter and others will continue in the first and second quarters of 2024. As for the U. S. exterior, we had already discussed what we would see — possibly seeing a $4 million headwind. in the fourth quarter. That’s pretty much what we saw, roughly, in the fourth quarter. Will we see this come to fruition in the first quarter?Probably not. It will be; It will take a few quarters to explain this. Therefore, there will be no bolus in the first quarter or the second. But we’ll fix it. As Tim commented, we recently got a waiver from Germany. To do this, we had to do a lot of work on logistics and labelling. And so it started at the end of January, but now we’re shipping there. But, again, we may not consider this to be a gig.
Lei Huang
Alright. It’s super useful. And my follow-up query is about Inspire V. Can you explain to us if you are still planning to register your application in early 24, i. e. in the first quarter? Is this how you feel about the start of 2024? And communicate your confidence point for it to be approved in 2024. Do we continue to communicate about the timing or the third quarter? I think I heard the comment later in the 24th.
Timothy P. Herbert
Yes. Thanks, Lei. I think that we have confidence in our development of the technology and the team is working on the final submissions. We’re not putting out the specific data on when that submission is going in as we work with the FDA but the submission will include both the Inspire V neurostimulator, the patient program or software changes, the physician program or software changes, it’s a full system-level submission and we do not only want to have approval in 2024, but we want to do a limited launch in 2024 as well. So our — we’re pretty consistent with the targets that we laid out previously.
Lei Huang
It is ok. So, there’s no extra color in Q3 for. . . sorry, the time from Q2 to Q3 on approval, how do I reset the clock?
Timothy P. Herbert
Yes, we will continue to work with the FDA to move forward with the review procedure and the FDA has time to review it. So yes, we’re going to be careful not to put any more color on it.
Operator
And I show that our next one comes from the line of Stifel’s Jon Block.
Jonathan David Block
Solid quarter, Rick and Tim. Maybe just 2 for me. Rick, for 1Q ’24 U.S. revs to be down mid- to high teens Q-over-Q, I need to get 1Q ’24 year-over-year utilization down 2% to 3% year-over-year. And that would be the first down year-over-year utilization since arguably the throes of COVID, and now you’ve got broader labels, you’ve got the pediatric opportunity in some of those facilities. I think you said you could even see some 3Q ’23 ongoing flop into 1Q ’24. So can you just explain why we would see sort of that level of a falloff in utilization, the down low single digits, again, to sort of put back to your sequential decline of down mid- to high teens.
Richard Buchholz
I mean, you have to look back. Thanks for the question, Jon. You have to look back at the first quarter of 2023. Remember, we enjoyed a 400 basis point profit on our expansion last year thanks to the schedule delay. orders when we brought the silicone cables to the U. S. last year. So there’s some of that at stake. But we’re excited for 2024 with the guidance we’ve laid out and we’re going to work to increase usage. And we’ve talked about a lot of other spaces that we’re going to be involved in. That’s our plan: to make it happen.
Jonathan David Block
Alright. That’s useful. And then to change the subject, Tim, just for SURMOUNT-OSA, I think I’ve heard you before, where it turns out to be a 50% relief on the AHI, which you think may be just for the company. And I think you have explained the reasons for this. Just to push it out, like, what isn’t it? In other words, is it a 60% relief? Is it 65%? Is 60% an approximate number? Your AHI drops from 50 to 20. United’s threshold is 20, not 15. Just to take a step back, is there any degree of AHI relief that you walk away from and say maybe that’s the case? Isn’t that a TAM extension at the end of the day?
Timothy P. Herbert
Ultimately, Jon, we don’t care about the AHI. What interests us is the mechanism of action. And we believe that the mechanism on which LPG acts is to reduce the collapse of the lateral wall. And we know that we are stimulating the hypoglossal nerve that moves the base of the tongue forward, it is very difficult for our patients to achieve that point of relief from the AHI. However, we need the patient to lose weight and rest the lateral side. Wall. So it’s not something that contributes to AHI and a patient with a higher AHI can clearly get a higher percentage of relief because they can lose weight, lose neck circumference, and have release of sag. of the lateral wall, thus presenting as a depression at the base of the tongue, which represents the majority of patients with low BMI. If your BMI is low, it is very difficult to achieve significant relief in AHI. So I think we’re moving toward seeing variable relief in AHI as you go from a low BMI to a higher BMI. Once again, we focus more on GLP-1, which helps patients lose weight, reduce neck circumference, and relieve lateral wall sinking, thus presenting tongue sinking that Inspire can treat them for.
Operator
And I show that our last one comes from Oppenheimer’s Suraj Kalia lineage.
Surah Kalia
Gentlemen, can you hear me?
Timothy P. Herbert
Yes, Suraj.
Surah Kalia
Tim, congratulations on a wonderful quarter. So, Tim: I guess the first question is for Rick. Rick, did you discuss a 70-30 split between new sales in the same store?If you could narrow it down a little bit more, consistent with, maybe in terms of consistent implants. Do I have to think about FY23 production, let’s say, in circular numbers, $6 million, $20 million, give or take, there’s a $200 million year-over-year buildup?70% come from the same site. Is this the right way to think about it?Or does another calculation apply to the 70-30 split?
Richard Buchholz
Yes, Suraj, thanks for the question. What I’m talking about is the percentage of our expansion, not the mix of our revenues, but more of the expansion coming from 70% of our existing centers and the remaining 30% from new centers.
Surah Kalia
It is ok. That’s fine with me. And Tim, on a more pedantic level, the average number of days of CPAP use that’s documented through a prospective patient, let’s say Suraj, shows up, either didn’t do well or isn’t liberal about CPAP. When you record documentation, what is it?the average number of failure or intolerance days displayed to download the HGNS authorization.
Timothy P. Herbert
Thanks, Suraj. Suraj, I think that that’s all over the place, that last number. For the most part, the patients who come in to receive Inspire therapy are not tolerant to Inspire — I’m sorry, are not tolerant to CPAP. Therefore, they have 0 utilization. And very few come in, if they are using CPAP to the numbers, what is it 4 nights — 4 hours a night for 5 of 7 nights, and if they’re compliant to that, it’s kind of difficult to get insurance approval because they’re compliance to CPAP. So the majority of our patients, they’ve been introduced to CPAP. They’ve tried CPAP. Maybe they’ve had some benefit with it, but they are not using CPAP, they’re not tolerant to it. And so it’s really not a big barrier for the physicians to document that those patients are unable to benefit from CPAP and are able to move forward with therapy. So thank you very much, Suraj. Just want to make one last note to everybody. I want to thank everybody for joining the call today. As always, I’m grateful to the growing team of dedicated Inspire employees for their enthusiasm, hard work and continued motivation to achieve successful and consistent patient outcomes. The team’s commitment to patients remains unmatched and is the most important element to our success. I wish to thank all of our employees as well as the health care teams for their continued efforts as we remain focused on further expanding our business in the United States, in Europe and in Asia. For all of you on the call, we appreciate your continued interest and support of Inspire and look forward to providing you with further updates in the months ahead.
Operator
This concludes the convening of today’s convention. You can now log out.